Impacts of Top Five Executives’ Compensation on Employee Wages

This paper studies the impacts of incentive compensation to the top five executives on employee wages. We employ pay-performance sensitivity (PPS) to measure executive incentive compensation. Using data for firms from Wharton Research Data Services over 1992 to 2017 period, we find that there exists a negative relation between executive incentive compensation and employee wages. In addition, we examine the impacts of executive incentive compensation on employee wages in different industries and find that the impacts are more severe in non-technology firms than in technology firms. Finally, we show that the executives with higher incentive compensation are more likely to suppress employee wages in financially distressed firms. Since the impacts of incentive compensation to top five executives on employee wages are similar to those to CEO, top executives appear to work together as a team, which supports executive compensation as team perspective. Furthermore, firm performance may not be promoted by granting high incentive compensation to executives.

Name thesis:degree_name

M.Sc. Management

Level thesis:degree_level

Masters

Discipline thesis:degree_discipline

Faculty of Business

Department dc:contributor.department

Faculty of Business Programs

Grantor

Brock University

Year dc:date.issued

2019

Author dc:creator

• Li, Qianqian

• Executive incentive compensation
• pay-performance sensitivity
• average employee wages
• income inequality
• agency conflicts

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/10464/14115

OAI identifier oai:identifier

oai:brocku.scholaris.ca:10464/14115